2016 (12) TMI 222 - AT - Central Excise

Valuation - chassis cleared by the appellant to body builder who after building the body cleared the complete vehicle to the depot of the appellant for sale by appellant - valuation u/r 8 of Valuation Rules, 2000 or as per Section 4 (1) (a) of the Central Excise Act, 1944 - Held that - On the first issue whether at all there is a sales of chassis to the body builder, we note that the appellants were clearing the same under a contract to built chassis thereafter deliver to the depots for final sale as vehicle to the intended buyers. The body builder is not buying the chassis from the appellant. There is no sale of chassis to the body builder. No evidence to that effect has been submitted. Further it is clear by the appellant own admission the body built vehicle is cleared from the body builder to the depot of the appellant and sold from there to the customers by the appellant. This clearly shows that there can be no sale of chassis separately to the body builder. We note that transaction value in terms of Section 4 (1) (a) cannot be arrived at based on costing figures provided by the corporate office of the appellant. Whereas the appellants claimed in the written submission before the Tribunal that they had sale of similar chassis to unrelated buyers. Now, this aspect requires verification with documents. In case the appellants were having independent sales of similar chassis, ex-factory, then the valuation of chassis cleared to body builder during the relevant period can be arrived at based on such independent transaction value. This aspect is required to be verified by the Original Authority. Accordingly, the matter is remanded back to the Original Authority for re-adjudication afresh - appeal allowed by way of remand.

Summary

Issues:
1. Whether the clearance of chassis to the body builder constitutes a sale transaction.
2. The method of valuation of chassis cleared by the appellant to the body builder.

Analysis:
1. The dispute revolved around whether the clearance of chassis to the body builder should be considered a sale transaction. The appellant argued that there was a transfer of possession of goods to the body builder, constituting a sale. However, the Revenue contended that the sale of the fully manufactured vehicle, including the chassis, only occurred at the appellant's depot. The Tribunal found that no sale of chassis to the body builder occurred, as the appellant cleared chassis under a contract for the body builder to build and deliver to the depot for final sale as a vehicle to customers. The body builder did not purchase the chassis from the appellant, and the appellant's admission confirmed that the body-built vehicle was sold from the depot to customers, indicating no separate sale of chassis to the body builder.

2. Regarding the valuation of the chassis, the Revenue applied Rule 8 of the Valuation Rules, 2000, determining the value for duty purposes as 110% of the chassis cost. The appellant argued for the adoption of transaction value under Section 4(1)(a) of the Central Excise Act, 1944, citing independent sales of similar chassis. The Tribunal noted that if the appellant had independent sales of similar chassis to unrelated buyers, the transaction value of such chassis could be used for valuation. Referring to relevant case laws, the Tribunal emphasized that Rule 8 would not apply if excisable goods were cleared to independent buyers. The Tribunal directed verification of the appellant's claim of independent sales for proper valuation, remanding the matter back to the Original Authority for re-adjudication with the appellant's opportunity to present their case.

In conclusion, the Tribunal ruled that there was no sale of chassis to the body builder and directed a re-evaluation of the chassis valuation based on the appellant's claim of independent sales, emphasizing the need for proper verification before a final decision is made.